Section 94Central Act
Section 94: Avoidance of tax by certain transactions in securities
Avoidance of tax by certain transactions in securities.
(1)
Where the owner of any securities (in this sub-section and in sub-section (2) referred to as "the owner") sells or transfers those securities, and buys back or reacquires the securities, then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable otherwise than by the owner, the interest payable as aforesaid shall, whether it would or would not have been chargeable to income-tax apart from the provisions of this sub-section, be deemed, for all the purposes of this Act, to be the income of the owner and not to be the income of any other person.Explanation.—The references in this sub-section to buying back or reacquiring the securities shall be deemed to include references to buying or acquiring similar securities, so, however, that where similar securities are bought or acquired, the owner shall be under no greater liability to income-tax than he would have been under if the original securities had been bought back or reacquired.(2)
Where any person has had at any time during any previous year any beneficial interest in any securities, and the result of any transaction relating to such securities or the income thereof is that, in respect of such securities within such year, either no income is received by him or the income received by him is less than the sum to which the income would have amounted if the income from such securities had accrued from day to day and been apportioned accordingly, then the income from such securities for such year shall be deemed to be the income of such person.(3)
The provisions of sub-section (1) or sub-section (2) shall not apply if the owner, or the person who has had a beneficial interest in the securities, as the case may be, proves to the satisfaction of the Assessing Officer—(a)
that there has been no avoidance of income-tax, or(b)
that the avoidance of income-tax was exceptional and not systematic and that there was not in his case in any of the three preceding years any avoidance of income-tax by a transaction of the nature referred to in sub-section (1) or sub-section (2).(4)
Where any person carrying on a business which consists wholly or partly in dealing in securities, buys or acquires any securities and sells back or retransfers the securities, then, if the result of the transaction is that interest becoming payable in respect of the securities is receivable by him but is not deemed to be his income by reason of the provisions contained in sub-section (1), no account shall be taken of the transaction in computing for any of the purposes of this Act the profits arising from or loss sustained in the business.(5)
Sub-section (4) shall have effect, subject to any necessary modifications, as if references to selling back or retransferring the securities included references to selling or transferring similar securities.(6)
The Assessing Officer may, by notice in writing, require any person to furnish him within such time as he may direct (not being less than twenty-eight days), in respect of all securities of which such person was the owner or in which he had a beneficial interest at any time during the period specified in the notice, such particulars as he considers necessary for the purposes of this section and for the purpose of discovering whether income-tax has been borne in respect of the interest on all those securities.(7)
Where—(a)
any person buys or acquires any securities or unit within a period of three months prior to the record date;(b)
such person sells or transfers—(c)
the dividend or income on such securities or unit received or receivable by such person is exempt,(8)
Where—(a)
any person buys or acquires any [securities or] units within a period of three months prior to the record date;(b)
such person is allotted additional [securities or] units without any payment on the basis of holding of such 99[securities or] units on such date;(c)
such person sells or transfers all or any of the [securities or] units referred to in clause (a) within a period of nine months after such date, while continuing to hold all or any of the additional [securities or] units referred to in clause (b),(aa)
"record date" means such date as may be fixed by—(i)
a company;(ii)
a Mutual Fund or the Administrator of the specified undertaking or the specified company referred to in the Explanation to clause (35) of section 10; or(iii)
a business trust defined in clause (13A) of section 2; or(iv)
an Alternative Investment Fund defined in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992),(d)
"unit" shall have the meaning assigned to it in clause (b) of the Explanation to section 115AB.Previous
Sec 93 — Avoidance of income-tax by transactions resulting in transfer of income to non-residents
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